The background and development of a multicategory direct observation system, the Behavior Observation Instrument (BOI), is described. This time-sampling procedure for recording the behavior of persons is demonstrated in several treatment settings and the results applied to issues of program evaluation. Elements that have prevented direct observation from being widely adopted, such as costs, manpower, and training requirements, are systematically analyzed. A basic psychometric analysis of the instrument is used to determine optimum frequency and duration of observation intervals as well as observer agreement. The results imply that direct observation methods, once assumed by some to belong to the special province of the single-subject design, can be used to assess the effects of programs on groups of psychiatric clients in an efficient and economic manner.